Archive for the ‘Demographics’ Category

The underlying Indian stock market growth is fueled by a burgeoning middle class with a voracious appetite for owning stocks.

The BSE Sensex is India¨s primary stock index. The Bombay Stock Market has been going for some 140 years (formed 1875) but the Sensex Index of 30 shares was established in 1986 and set its reference value of 100 on a base date chosen to be 1st April 1979. It is now 40 years since the base date and the index stands at over 39,000. For stock investors this represents an annual rate of growth over the 40 years of over 17%.

Rather than a measure of – except indirectly – of the economy or industrialisation, I see the BSE Sensex as primarily a measure of the appetite for investing in stocks. As such, it is a phenomenon of, and by, and for, the “middle class”. Much of the growth of the index is thus due to new owners of stocks entering the market.

It is thought that India has around 25 million owners of stocks. There are many definitions of the “middle-class”. I find defining the middle-class by the number of households with a disposable, annual income of over $10,000 is probably the best indicator of the number of stock investors. By this measure the number of stock investors is about half the number of such households. Currently – 2019 – the number of such households is about 50 million and covers 120 – 150 million of the total population of 1,300 million.

The Indian population will probably reach around 1,500 million and start declining after 2050. It can be expected that the growth of the stock-owning middle-class will keep increasing till then and even for a decade or two after population decline begins. A not-unreasonable projection would be that the underlying growth of the stock index will follow the appetite for owning stocks.

The total number of shares available, the number of investors available and the price of the shares are inextricably linked with the state of the economy. An increasing appetite for a fixed number of available shares will follow the number of investors available. This would increase both share price and market capitalisation. However the number of shares available will, given even a modest growth in the economy, probably track the growth in total population. However, the underlying growth over the next 30 years is unlikely to reach the heights of the last 40 years. A saturation law applies and my expectation would be a growth in the index of between 2 and 3 times the current value. Since the number of investors would have grown by a factor of 8 this implies that the total capitalisation of Indian companies on the stock market could be closer to 20 times higher than now.

5.075 million babies were born in the EU in 2017, down from 5.148 million in 2016. The total fertility rate reduced to 1.59 births per woman, also down from 1.60 the year before. No country came anywhere near the 2.1 births per woman needed to replenish any population.

France had the highest fertility rate at 1.90 births per woman, followed by Sweden (1.78), Ireland (1.77), Denmark (1.75), and the United Kingdom (1.74). The lowest fertility rates were in Malta (1.26), Spain (1.31), Italy and Cyprus (both 1.32), Greece (1.35), Portugal (1.38), and Luxembourg (1.39).

The average age of first-time mothers is also increasing, at 29.1 compared to 29.0 years in 2016.

The politically correct belief in the EU is that getting a large number of migrants from Africa will boost the work-force and allow pensions and healthcare for the elderly to be maintained. However this has been shown to be a little naive. Many new downsides have been introduced by the new migrants since they have been – relatively – unschooled, unskilled, reluctant to integrate and often requiring a much greater degree of state support, and for a much longer time, than the politicians had hoped for. Many migrants have been slower to enter the work-place than hoped. New stresses are being introduced by the reluctance (or the inability) of the migrants to adapt.

Using immigration alone as an alternative to having children can never work. It only ensures the extinction of the “native population”. Having fewer children in all cases will always lead to the native population becoming extinct. Having fewer children and simultaneously having more immigration, only means that the native born population is swamped and suppressed before becoming extinct. EU politicians are often so enamoured of their pet theories that they are in denial about reality. Immigration can help to provide a demographic breathing space for a limited period and provided the number of migrants can be assimilated. But a permanent, continuous stream of immigration to keep a country alive, while the native population declines, is absurd.

The simple demographic reality (which a few of the Eastern European countries have started to realise) is that any population – if it wants to survive – needs to replenish its children.

The Hungarians have been criticised by the politically correct part of the EU for introducing incentives for having children. This criticism is particularly short-sighted (if not plain stupid). The EU needs fertility rates to increase and soon. Incentives for having children are inevitable and will become standard in almost every country.

During 2018, it is estimated that around 140 million babies were born and that around 60 million people died. The global population had reached 7.7 billion at the end of 2018.

In addition, around 41 million legal abortions were carried out in 2018. There may also be a significant number of illegal or unreported abortions so that the total number may be around 50 million.

Global fertility rates are declining inexorably. The number of babies born will be reducing over the next 100 years (with the biggest declines expected in Africa). The crude death rate is a balance between two trends; first the decline due to improving health care (and longevity) and second the increase due to an increasing population of the aged. By around 2090 deaths will exceed births and by 2100 the world population will be in decline.

Abortions are not recorded in either birth or death statistics. But what is not in doubt is that the actual number of babies born is almost 30% lower because of abortions. If abortions were included in both birth and death statistics the natural population increase (births minus deaths) would remain unchanged (190m-110m instead of 140m-60m). However, abortions would then be the single highest cause of death. The next highest cause of death would then be coronary artery disease (around 10m).

The long term, global, fertility and morbidity trends are not affected by the number of abortions. Even if no abortions took place, world population would still stabilise and then decline but this would be delayed by about 40 years (stabilisation and decline in 2130 instead of about 2090).

That abortion is now a significant demographic parameter is self-evident.

The morality or rightness of carrying out abortions is a different matter and primarily for women to decide on. The human species is the only one which has the ability to, and does, carry out intentional abortions. That women should be assisted to carry out abortions to preserve their health or for other necessary medical reasons (physical or mental) seems obvious.

I am not so sure that assisting abortions for the convenience of the mother or for covering up carelessness is equally justified. Or that 41 million legal abortions is a number to celebrate or to be particularly proud of.

Race is real and not just an imagined construct of modern times. Even two thousand years ago (about 100 generations) races were recognised and used as a classification. They were somewhat different to those recognised today – but not so very different. In the main, racial attribution followed known or assumed tribal affiliations and visible physical characteristics. Even in Roman times, members of the Celtic tribes and the Germanic tribes and Egyptians and Greeks and Africans were all depicted as differing in physical characteristics and of being of different races. Whether among the various European tribes or the 12 tribes of Israel or the castes established in India, parentage and ancestry manifested as visible, physical characteristics were – and still are – used in race classifications. It is virtually certain that the races that existed 2,000 years before the heyday of the Roman Empire were different again. If 5,000 years ago the Harappans were a race, their genes are now spread all over the sub-continent and they are are no longer identifiable.

Though classification of a race is by the visible attributes it is inevitable that they are accompanied by non-visible attributes. The non-visible attributes may show up as the ability to tolerate high altitude, or the aptitude for long distance running, or for sprinting, or for diving. They may include resistance to some diseases and a propensity for others. The non-visible attributes could include any characteristic dependant upon genetics. And even if politically incorrect to say so, it could include the genetic components of intelligence. Insofar as behaviour is determined genetically, a race may have characteristic behaviours.

Race is a system of classification of humans by clustering their visible, physical attributes. The classification is real but is not static. It is dynamic in that the clustering may change over long time periods (hundreds of generations) as mixing or non-mixing between the clusters occurs. (One hundred generations would need about 2,000 years).

Visible physical attributes are primarily determined by parentage and thus by ancestry and thus by genetics.

Racial classification is therefore a genetic classification but sorted by visible characteristics.

Differences in the visible attributes between clusters are emphasised when the clusters are genetically isolated from each other. Geographic isolation contributes but the critical point is genetic isolation.

A particular race cluster persists only if breeding is constrained to be within and among members of the cluster.

Race is classification by snapshot – a current clustering by physical attributes. The clustering will change slowly over tens of generations but at every time, a snapshot of the current races will exist.

Great Britain has been a melting pot of peoples mainly from across Europe for 2,000 years. But the British “race” is still in flux. The US is often considered a melting pot for the blending of genes and it would then make sense for the gradual emergence of an “American” race. With the surge of emigration into Europe and the decline in fertility of the “native Europeans”, a gradual emergence of a “European” race would also seem probable. However the tendency of immigrant groups to marry among themselves and isolate their particular gene pools, works strongly against the emergence of new races.

If continuous, steady, immigration becomes the new normal and immigrant groups keep to themselves, it may never happen. If it does, I expect it will take more than a thousand years (50 generations) before the world sees an identifiable American or a European race.

But a thousand years hence there will still be clustering of peoples by visible, physical attributes and identification of peoples by the races of the day.

Skin colour is by far the most visible and thus the obvious attribute that is first used as a sorting criterion for race classification. I suspect that skin colour would dominate as the sorting criterion even if some race had some very significant, but less visible difference, such as – say – an extra finger.

The latest fertility statistics in Europe present an unsustainable picture. Nowhere is the fertility rate at or higher than the replenishment rate of 2.1 live births per women. The average for Europe is under 1.6 with a mean age of 29 for a woman having her first child. France and Ireland have the highest rates but still less than 2.0 followed by Sweden, the UK and Iceland (all between 1.8 and 1.9). The lowest rates are in Poland, Portugal, Greece, Spain and Italy (all less than 1.4).

These levels are unsustainable.

A declining population if left to itself would lead to a catastrophic population implosion. The Black Death in England (1348-1350) reduced the population by over 30% and it took the country almost 100 years to recover. Europe today is relying on immigration to compensate for the low fertility. Initially, immigrants have a higher fertility rate than the society they move in to but within one generation they too display the prevailing fertility rates. Just relying on immigration creates social stresses and is also unsustainable.

Within the next twenty years most European countries will have no choice but to introduce tax incentives for having more children. In fact it is necessary now.

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Eugenics, because of the way it was practised by the Nazis, has become a bit of a taboo word. But it has been practised in silence and by default for some time now.

ktwop (2013):

The trends I think are fairly clear. The proportion of “artificial births” is increasing and the element of genetic selection by screening for desired charateristics in such cases is on the increase. The number of abortions after conception would seem to be on its way to some “stable” level of perhaps 25% of all conceptions. The genetic content of the decision to abort however is also increasing and it is likely that the frequency of births where genetic disorders exist or where the propensity for debilitating disease is high will decrease sharply as genetic screening techniques develop further.

It is still a long way off to humans breeding for specific charateristics but even what is being practised now is the start of eugenics in all but name. And it is not difficult to imagine that eugenics – without any hint of coercion – but where parents or the mothers-to-be select for certain characteristics or deselect (by abortion) to avoid others in their children-to-be will be de rigueur.

As neonatal screening techniques improve, eugenics is no longer just by default but is increasingly due to an active choice being made. Down syndrome is already well on the way to being eradicated.

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The “baby boomer” phenomenon is primarily seen in countries which participated in WW2. Globally however, this effect is swamped by the increasing population and longevity in Asia and Africa. Babies born per year have increased from just under 100 million in 1950 to about 140 million now.

Birth rates are of course sinking fast but the number of births will only decline once the rate of population increase can no longer compensate. This will happen but not for another 20 – 30 years. (source: UN World Population Prospect 2012 and 2017).

The Silent Generation applies to those born before 1945.

After the Baby Boomers comes Generation X. The “millennials” are Generation Y. Generation Z has now passed and a new name has to be coined for the current generation being born. Alpha Generation seems to be the favourite.

It should be remembered that the Silent Generation begat the Baby Boomers. In N America much of the whining comes from the Millennials. But it was Gen X and not the Baby Boomers who preceded the Millennials.

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The cold hand of demographics cannot be denied. Global population will begin to decline soon after 2100. The real question is whether an implosion can be avoided, economic decline can be held at bay and that an irreversible death spiral can be avoided.

For over 100 years it has been the threat of unsustainable population explosion which has exercised the minds of governments and policy makers. There are still many people who have spent their lives confronting this problem and cannot adjust to the new reality. This reality is that fertility rate is declining across the world. There is nowhere in the world where the rate is not declining. There are still many countries where the rate is greater than the 2.1 children per woman needed to just hold the population constant.

Soon after 2100 population will begin to decline everywhere across the world. In many countries population decline is already well established. Population decline is compounded by increasing longevity and a decline in the ratio of working population to aged population. Declining (and ageing) populations threaten the start of a downward death spiral of economic decline.

“In the final summing up, therefore, I do not depart from the old Malthusian conclusion. I only wish to warn you that the chaining up of the one devil may, if we are careless, only serve to loose another still fiercer and more intractable.”

The point is that this decline is inevitable. Demographic trends cannot be denied over a matter of 2 or 3 generations. Hopefully the decline will be slow and allow time for corrective actions – provided however that irreversible economic decline does not set in.

Mitigation by automation

The critical parameter will be whether total GDP can be maintained at a level to allow the per capita GDP to be increased or, at least, maintained in spite of a declining labour force.

For the past 500 years (perhaps more), economic activity has been consumer driven and with a surplus of labour always available. Labour and its ready availability was in itself also the capital to be employed. Growth has been achieved by the increase of production exceeding the growth of population. Agricultural production before the industrial age was primarily a function of the labour available. With the advent of the industrial age, the link between labour force and production remained strong but industrialisation allowed an enormous productivity increase. It is the introduction of industrialisation into agricultural production which has also allowed the rapidly increasing population to be fed. However the last 6 or 7 decades has seen the industrial age morph into the age of automation. Automation is now gathering pace. Growth is no longer as dependent upon the availability of labour as it was.

With population declining it is likely that GDP will – in the long term – also decline. Production cannot happen without consumption. However ii is not necessary that the total GDP decline must exceed the decline of population. In the short term there may well be an increase of per capita consumption (and of per capita production). The question becomes how to maintain production with a decreasing work force available. But this is a question that all commercial enterprises face already. In the last 60 – 70 years, reducing work force and increasing automation has become a standard method of reducing cost and increasing productivity.

Within two decades I expect that driver-less vehicles, pilot-less aircraft, army-less wars will be common place. Robot diagnosticians, AI assisted surgeons and teller-less banks are already here. Idiot-less politicians would be nice. The bottom line is that the paradigm that more employees means more production is broken.

Automation has already progressed to the level where just the availability of a young work force is no longer a guarantee that production will (or can be made to) increase. The unemployment level of the less-educated youth of the world is testimony to that. Clearly if automation eliminates the need for human labour for all routine, repetitive tasks, then it also becomes necessary to occupy these young with years of further education. Together with a population living ever longer, the dependency ratio (ratio of non-working to working population) will obviously increase and increase sharply. For a government this can be a nightmare. Revenue generation is from the working population and large chunks of revenue consumption is for the education of the young and the care of the elderly. But that is also because tax revenues are so strongly dependent upon taxing the labour force. If the dependence of production upon the labour force is weakened (as it must be with increasing automation), and since production must eventually match consumption, then the entire taxation system must also tilt towards taxing consumption and away from taxing human labour for its efforts. (Taxing production is effectively also a tax on consumption because production which is not for consumption is not sustainable). Increasing automation also breaks the taxation paradigm.

It seems to me therefore, that a population decline is not something to be afraid of. It is imperative that the decline not be allowed to become an implosion. However a slow decline starting soon after 2100 can be managed. It is going to need over the next 100 years

shifting away from income or labour related taxes and towards consumption tax

I can see population developing to “hunt” for a stable, sustainable level at perhaps around 9 – 10 billion with increases coming when new world are opened up to colonise. Pure speculation of course, but as valid as anything else.

Population decline is not something to be afraid of. The next 100 years will be fascinating.

The Global Burden of Disease Study (GBD) is the most comprehensive worldwide observational epidemiological study to date. It describes mortality and morbidity from major diseases, injuries and risk factors to health at global, national and regional levels. Examining trends from 1990 to the present and making comparisons across populations enables understanding of the changing health challenges facing people across the world in the 21st century.

One section deals with Mortality, and of major significance is the deaths of children (< 5 years). Around 4.6% – 340 million – of the worlds population of 7.5 billion is under 5 (UN World Population Prospects 2017). Death is becoming the preserve of the old – as it should be. In the last 50 years, death has shifted decisively away from children to the aged.

About 5 million recorded deaths in 2016 were of children under 5 and had reduced from about 16 million in 1970. In that time the total number of children <5 has doubled. In 2016, deaths of children < 5 has reduced to one-sixth of the proportion in 1970. Almost two-thirds of all deaths are now at ages above 50 years. There are, for the first time, more deaths at ages above 75 than between 50 and 74 and, it would seem, is poised to increase sharply.

About 40% of the world’s population (60% in Africa) is now under 25 years old. The vast majority of them will live to see 75.